Ayala Land to Boost Record Profit on Increased Home Demand

March 25 (Bloomberg) -- Ayala Land Inc. said it expects to
expand its record profit this year as the Philippines’ largest
builder takes advantage of a housing shortage and develops
business districts outside the capital.

“That is very possible given the very positive tailwind
we’re getting from the Philippine economy,” Ayala Land
President Antonino Aquino said in an interview with Bloomberg
Television on March 20.

The developer stands to benefit from an under-supply of
housing it estimates at 4 million homes nationwide. Profit rose
27 percent to a record 9.04 billion pesos ($221 million) in 2012.
The company, which developed the Makati business district in
Manila, has said it targets to boost profit to 10 billion pesos
by 2014.

The Philippines’ $225 billion economy expanded 6.6 percent
last year, the fastest pace in two years, as government spending
and consumption rose. Its 6.8 percent expansion last quarter
beat that of Indonesia, Malaysia and India. Standard & Poor’s in
December raised the Philippines’ sovereign debt outlook to
positive on improved governance and public finances, bringing it
closer to investment-grade status.

“Ayala Land is in the best position to capitalize on the
economy’s growth momentum because it is in everything from
housing to retail to offices, and geographically it is
everywhere,” Richard Laneda, an analyst at Manila-based COL
Financial Group Inc., said.

Profit growth may decelerate after coming from a high base
in 2012, he said. Growth in net income has been slowing, rising
35 percent in 2010 and 31 percent in 2011.

Robust Market

Ayala Land rose 3.7 percent to 30.90 pesos at the close of
Manila trading, the biggest gain since March 6. Ayala shares
have gained 17 percent this year, compared with the stock
benchmark index’s 14 percent advance.

The builder, based in Manila, has diversified its
residential portfolio into five brands selling homes from
400,000 pesos to 35 million pesos. Its housing business accounts
for almost half of earnings.

“From a total fundamental standpoint, we see this market
will continue to be robust,” Aquino said, citing the shortage
of homes across the country.

Competition in the Philippine property market has led to
“very disciplined” pricing, such that “we don’t see the risk
as far as a price bubble is concerned,” Aquino said. The risk
could be in terms of “potential oversupply in some market
segments in some locations, and we just have to be alert to
being able to spot this particular risk.”

Ayala Land seeks to replicate the Makati business district
on 74 hectares of prime land it bought from the government last
year, and build communities outside the Philippine capital,
Aquino said.

The company will continue to boost its land bank to build,
he said. It will spend 65.5 billion pesos this year and start 69
projects worth 129 billion pesos, the company said on Feb. 13.